Steady as it goes for construction in B.C.

The province’s unprecedented construction boom is expected to give way to a more normal level of activity, although the sector will remain a key driver of economic growth in the Lower Mainland and the province. But a shortage of skilled labour looms for planned projects, let alone those to come.

Photo collage by Maggie Wong/Vancouver Sun

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, Vancouver Sun

For B.C. commuters, construction often means obstruction — road works on highways, sewer installation in the suburbs, bridge repairs on major routes, office towers rising downtown and heavy equipment moving ever so slowly toward the next project.

While construction may bring traffic to a crawl, the industry has been among the principal drivers of the B.C. economy. The estimate of the direct and indirect contribution of construction to B.C.’s gross domestic product is $30 billion. With the exception of a dip in 2009, the industry has grown every year in the past decade, and at a faster pace than any other sector of the economy.

Construction accounted directly for 6.6 per cent of provincial GDP in 2011. That does not include indirect ripple effects.

At its peak in 2008, construction surpassed manufacturing for the first time as the largest employer in the goods sector — that part of the economy that harvests, extracts or transforms raw materials into products that can be handled or stored. In that year, there were 221,000 people — double the number in 2001 and nearly one in 10 of all workers — employed by the construction industry in B.C., according to Statistics Canada’s Labour Force Survey.

Employment dropped by nearly 15 per cent during the recession but remains well above the average of the past two decades.

Demand for skilled workers is expected to continue to grow. The B.C. Industry Training Authority forecasts a skilled labour shortage of at least 160,000 by 2015, while the B.C. Construction Association says 45,000 more skilled jobs need to be filled to complete major projects already planned.

This torrid pace of growth cannot be sustained.

“We saw unprecedented growth in the last decade,” said Anne McMullin, chief executive officer of the Urban Development Institute. “Now we’re going to more normal levels over the next decade.”

It’s not clear whether that “normal” growth will be led by residential construction or industrial construction.

On the residential front, the Canada Mortgage and Canada Mortgage and Housing Corp. expects multi-family construction to rise 11.8 per cent this year with a stable level of starts on new single-family detached houses. On the industrial construction front, 36 new proposals, representing capital investment of $4.9 billion, were recently added to B.C.’s major project inventory, bringing the total capital cost of all proposed projects to $133.6 billion (not including the $77.9 billion of construction already underway).

On average, residential buildings account for about 38 per cent of the construction industry, industrial construction 29 per cent, non-residential buildings 13 per cent, and repairs 20 per cent. However, that mix could change depending on the number of projects that proceed, the rates of housing starts and household formation, or the number of seniors who decide to renovate rather than move.

Between now and 2035, B.C.’s population will grow from 4.6 million to 6.1 million and the number of people over the age of 65 will double to 1.4 million, according to BC Stats projections.

The Lower Mainland will be the focus of this population boom, meaning another two million people will have to be provided with housing plus retail, transportation and institutional services, such as schools and hospitals.

“We firmly believe we have to densify,” said McMullin of the Urban Development Institute. “Household formation is changing, homes are getting smaller. The suburbs are becoming cities themselves.”

The construction industry will profit from the expansion of these communities, developing multi-family units in planned communities where people live, work, shop and play. The city of Surrey, for example, has multi-billion-dollar building plans, both public and private, to accommodate its burgeoning population, including the $500-million expansion of Surrey Memorial Hospital and a $97-million city hall and community plaza.

Even when housing starts stall, the renovation business tends to be steady. The resale housing market will likely keep renovators busy while a growing number of seniors who choose to stay in their homes may need retrofits to make that possible. Issues of sustainability have created a market for building modifications related to energy and water consumption and conservation.

The future is equally bright for major industrial projects. Port Metro Vancouver has started a 10-year, $950-million expansion of its operations, beginning with improvements at the Centerm container facility in downtown Vancouver. Construction is underway on the $444-million Red Chris copper-gold mine. Hydroelectric projects (BC Hydro’s Site C proposal and Alterra Power’s $3.3-billion run-of-river proposal), oil and gas projects (LNG plants and the Northern Gateway pipeline from the Alberta oilsands) and mines (such as the New Prosperity project) promise many years of industrial construction activity in the province.

While the demand side of the construction industry looks robust in the medium term, the construction industry will be challenged by a number of emerging trends.

Manley McLachlan, president of the British Columbia Construction Association, said the supply of skilled labour is the most pressing issue, one his members are trying to handle with training and apprenticeship programs and reaching out to under-utilized labour pools such as women, immigrants and First Nations members.

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